In today's world, products are most likely not made in only one part of the world. Due to globalisation, many products are produced in one part of the world and then shipped to another part where they are sold. This is often referred to as "Made in the World".
When the product passes through borders, it has to cross different countries and sometimes even the same borders multiple times. This applies to multiple products from various industries such as the automotive and aerospace industry and the pharmaceutical and food sectors. On the way are possible worst-case scenarios for such global supply chains, as Stefan Reinhardt, Area Sales Manager DACH at KGH, explains:
"There are multiple worst-case scenarios for a supply chain. There can be delays when goods are stuck in Customs. This can happen because tariff numbers are wrongly selected, or there are formal errors on the documents. Sufficient customs expertise internally or by an external service provider can prevent this."
Changing consumer patterns and inventory management from “just-in-time” to “just-in-case”
Given the challenges and changes over the last one and a half years with Covid-19 impacting individuals and societies on a health and economic level, it was often discussed how this would impact global trade. The huge question was if economies would slow down and even a "deglobalisation" would take place.
However, quite the opposite was the case. As e-commerce saw a significant increase, more and more products were shipped worldwide, and societies consumed more products than services such as restaurant visits or flights. According to UNCTAD, E-commerce's share of global retail trade rose from 14% in 2019 to about 17% in 2020.
With that, many international trading companies moved their inventory management from "just-in-time" to "just-in-case", showing an increased demand for visibility and predictability in global supply chains. Additionally, trading companies realised once a crisis strikes, they need a backup plan.
Why Customs Services are important for your business
Continued increasing globalisation of trade, combined with higher demands for visibility and predictability, calls for a high standard of customs handling. Companies acting on a global market will need better control and oversight of their entire customs processes. There are many reasons for this, one being compliance and the need to always stay on top of upcoming changes in legislation.
"A factor that is becoming increasingly important in the supply chain is risk management. In addition to customs-related issues, foreign trade issues also play an important role, for example, sanctions list checks, licensing requirements, restrictions, and bans on the import and export of goods. This area belongs in the preliminary examination to avoid delays in the supply chain and also possible penalties."
That means, your business needs to consider such changes in legislation and compliance to avoid additional costs. However, there are also business-related reasons where optimised customs efficiency can cut costs. This can be done through strategic customs compliance management, more innovative work processes and enhanced predictability while improving sourcing capabilities – all of which ultimately enhances the financial and operational impact on the bottom line.
"Well-maintained data and a correspondingly organised and increasingly digitised and automated flow of data, both internally in the company and to external partners, are the basis for a stable supply chain. This is especially true for customs-related data in order to avoid frictional losses and costs through redundant and manual data collection."
How you can ensure strong supply chains moving forward
Working with experienced experts from reputable companies in customs and logistics services adds flexibility to your supply chain. Today, customs are an important factor in global trade, and trading companies need to manage customs as an integrated part of their supply chain strategy. Customs have never been more important than now – but will be even more important tomorrow.
We're here to guide you through Customs Clearance Services. With us, you can be assured of an effortless and secure process. Whether you are looking for import or export customs clearance, our experts can guide you through the process.
If you are an experienced exporter or importer, you might be familiar with the customs clearance process, so we created a short checklist for you – make sure these items are on your checklist:
Give yourself and your preferred shipping service enough time to process your freight and get them through customs clearance – and to your suppliers or buyers – within the agreed time frame.
You might have further questions about the customs clearance process. In that case, KGH – A Maersk Brand, is here to guide you through the process to improve the required foresight, predictability, control and compliance when it comes to Customs Services – especially focused on the European market. If you are looking for help in other parts of the world, our partner Maersk is here to help and guide you.